Party caps and money fairness

On the Andrew Marr show (15/4) , Ed Miliband proposed that party funding should be limited, not to the £50,000 that David Cameron was suggesting but to 10% of that, a seemingly low £5,000. This is a radical change from the current unrestricted donations allowed (full details of current regulations can be found here) but is it for fiscal fairness, or comparative advantage?

With stories circulating in recent months about how a donation of £250,000 to the Conservatives puts you in the “Premier League”, where “if you’re unhappy about something, we will listen to you and put it into the policy committee at Number 10 – we feed all feedback to the policy committee”, a drop to even £50,000 let alone £5,000 seems odd but when taken in context is perhaps sensible. Those claims by former Conservative Party Co-Treasurer Peter Cruddas have been vehemently denied by David Cameron and it is likely that Mr Cruddas was exaggerating the power of money to gain donations but the basic point still stands; money talks and not everyone has that kind of money.

The average wage in the UK is around £26,000 a year, and even within that there is huge disparity with the average being £17,500 in Wales and £27,000 in London. The proposed Conservative cap is therefore around double the average earnings of a UK resident. The donations by the less well-off therefore won’t be that much more significant because they are still being hugely out spent by richer people. It would appear then that lowering the maximum to £5,000 is a step in the right direction to make ordinary people as important as the richest when donating. A cap of £50,000 would not stop the wealthiest influencing policies although the idea of donating £5,000 to a political party to the vast majority of people is still absurd. In relative terms, there is only one winner but it would not solve the problem by any means.

However this isn’t simply Ed trying to make money fairer in politics. All the main parties receive donations above £100,000 so you would be forgiven for thinking that Labour, the Lib Dems and Conservatives would be hit relatively equally. This would certainly not be the case if Ed’s plans went through. Every year through membership ties, the unions donate £7.5m to the Labour Party. This would be technically allowed under the £5,000 limit because no more than £3 per person is being donated. The scheme is opt-out for union members but there is fairly compelling evidence that most people who don’t want their money given away will not find the time to opt-out in a system like that. The Conservatives receive the majority of their donations from large private donors who would now be excluded, but the largest private donor of the Labour Party – the unions – would not.

I believe that there does need to be some regulation of how political parties get their money and a cap may be a way to do this, but the far more pressing issue should be that money buying influence (as it has been claimed to do) should be eradicated. It has no place in our liberal democracy. A cap will help this but it is the internal working of parties that is the main threat.

Depending on whether you read the Telegraph or the Guardian, you’ll see this move as a “wheeze” by a scheming Miliband or a “Tory snub” on a defiant Labour proposal. Either way, a complete rejection by Cameron could send out the message that the rich can buy influence in politics and acceptance would bring Miliband under fire for manipulating legislation for his benefit.